Romania risks losing €770 million in EU funds amid political crisis, FT reports

Romania is at risk of losing €770 million in European Union recovery funds after a political crisis blocked reforms demanded by Brussels.

The European Commission set Aug. 31 as the deadline for adopting changes to public-sector pay and loss-making state companies. The money, allocated for post-pandemic economic recovery, is available only until the end of the year. Romania’s Social Democrats opposed the bills and left the governing coalition in May. Since then, the parties have failed to agree on a new prime minister.

Siegfried Mureșan, the center-right parties’ preferred candidate for prime minister, described the deadlock as a “test of political truth” over Romania’s commitment to reforming a public sector considered unsustainable since the post-communist period. “Reforming the public-sector pay law would correct inequalities, limit privileges granted on political grounds and unlock €770 million,” he told the Financial Times.

“

Reforming the public-sector pay law would correct inequalities, limit privileges granted on political grounds and unlock €770 million.

The dispute also reflects a broader fight over political influence in state institutions and companies. The proposed reforms would affect networks that have long relied on public-sector jobs, board appointments and subsidies as political currency. The Social Democrats said the measures were excessively austere and argued that former Prime Minister Ilie Bolojan should have negotiated a better agreement with the European Commission.

State-owned companies remain a major burden. Railway operator CFR expects losses of about €100 million this year, while its debts exceeded €430 million at the end of 2025. The company has struggled to maintain and modernize its network and trains. “Keeping the status quo in these companies, without any reform, has created black holes for Romania’s economy,” Deputy Prime Minister Oana-Clara Gheorghiu said in April.

“

Keeping the status quo in these companies, without any reform, has created black holes for Romania’s economy.